The stalking of Rupert Murdoch

For a few brief days, Rupert ­Murdoch was free and clear. With the formal split of his media empire into two separate companies on June 28, Murdoch had shrugged off the cautious advisers that hemmed him in for two decades; he had shed his wife, Wendi Deng, who now tired him; and his lawyers had finally ring-fenced the huge damage from the UK hacking scandal.

This new beginning, at least on the newspaper side of the split, would be played as Murdoch solitaire. At 82, Rupert was alone and revelling in the chance to build a new newspaper empire, “doing it all over again”, as he told investors.

Five days later his past caught up with him, putting him at the centre of a new ­bribery investigation.

The crisis that now envelops him has unfolded like a whodunit mystery. For behind the public controversy, there is a pattern. Someone is stalking Murdoch.

He doesn’t know who it is. But this time the damage has not come from commercial rivals such as The Guardian or The New York Times. It’s Murdoch’s own people who have turned on him.

For two years, London’s Metropolitan Police have been investigating telephone and computer hacking and bribery of public officials by Murdoch’s journalists at The Sun and News of the World.

Now after devastating revelations on July 3, based on a secret tape recording of the News Corp chief addressing journalists atTheSun, police want to establish what ­Murdoch himself might have known about bribing police and prison officers.

British politicians meanwhile have called him back before the culture, media and sport select committee to explain himself.

Contagion threatens

The danger posed by the secret tape is contagion: that the UK hacking/bribery scandal, so carefully separated from 21st Century Fox (the profitable part of the old News Corp, which Murdoch still controls as executive chairman) will leap over the firewalls. The contagion threat is Murdoch ­himself, with his twin roles at News Corp and 21st Century Fox, if he is caught up in this new investigation.

It’s important to understand just how successful News Corp’s lawyers have been in containing the damage in Britain and , so far, in protecting upper management despite the scale of the investigation.

Police now believe News of the World hacked the voicemail of 5500 people. It is investigating 154 separate cases of computer hacking and hundreds of instances of payments to police and prison officers.

All but a couple of the 126 people arrested either worked for News International as journalists or were allegedly bribed by News journalists. Six people have been convicted, with another 40 charged. No further action is being taken against 24 people, while another 56 are on bail waiting to see if charges will be laid. And while News will probably end up paying $US1 billion ($1.09 billion) to settle the civil actions by its victims, there has been no management accountability for any of it. The former head of News International, James Murdoch, has been promoted to the US. His successor, Rebekah Brooks, has been charged but received a huge termination payout and ongoing personal support from Murdoch.

Picture an investigation twice as big as the Australian tax investigation Project Wickenby, but with all the criminal behaviour sourced to one company. And the managers had no idea of any of it.

Less than benign

Yet as the last two weeks have shown, not everyone at News shares this benign view of management oversight.

The saga began when Murdoch slipped into London in March on his way to Italy.

Just over a year before, police had arrested a string of Sun journalists, using information provided to them by News Corp’s management and standards committee. On March 6, 2012, the Evening Standard reported that two Sun journalists, including defence editor Virginia Wheeler, had attempted to commit suicide.

Murdoch paid their hospital bills. On March 6, 2013, he agreed to meet about 25 deeply traumatised Sun journalists, all of whom had been arrested by police. Most were still waiting to see if they would be charged.

Murdoch offered a mea culpa of sorts (although it wasn’t really his fault, as he pointed out repeatedly), railing against the “incompetence” of the police, the unfairness of the allegations and how completely unnecessary the whole investigation had been.

What Murdoch never seems to have realised was that the overwhelming issue for the journalists he met back on March 6 was the criminal trials overhanging each of them. What was their defence going to be?

The most obvious line was the Nuremberg defence – they paid policemen tens of thousands of pounds for news tips because they were told to, they were expected to, because it was the company culture.

According to Channel Four News in Britain, at least three people taped the March 6 meeting. It seems almost certain that the first people they played the tapes to were their lawyers – though it’s News International who provided the lawyers.

From here the story seemingly went dead for two months. On June 5, the Crown prosecution service announced it would was dropping charges against Wheeler on health grounds (her lawyer had said she would ­vigorously defend the case). This allowed British papers to report that the former policeman Wheeler is alleged to have paid £7500 ($12,400) for news tips, had earlier received a two-year prison sentence.

It was a reminder that journalists convicted of bribery faced serious prison time.

Legal advantages

In the days following, someone decided to leak the March 6 tape. It’s not hard to see the legal advantages of having the tape in the public domain without any explanations of how it got there.

On June 14, satirical magazine Private Eye wrote a 560-word story revealing the existence of a tape and detailing the high points of what Murdoch said. The story was overwhelmed by the news the day before that Murdoch was divorcing Deng.

Two weeks later came a much more damaging leak. On July 3, investigative website ExaroNews published the entire March 6 transcript, and together with Channel 4 News released audio extracts.

By July 7, the second anniversary of ­Murdoch’s decision to close News of the World, police were seeking a copy of the tape.

Much of the coverage since has focused on the total disconnect between Murdoch’s private comments here and his contrite ­public apologies before a Commons select committee and the Leveson inquiry.

“Mr Murdoch never knew of payments made by The Sun staff to police before News Corporation disclosed that to UK authorities,” a News spokesman said. “Furthermore, he never said he knew of payments. It’s absolutely false to suggest otherwise.”

But the real threat from March 6 lies not just in what Murdoch said, but the questions that prompted his answers. For while his comments appear to relate broadly to the industry, in context he is being asked specifically about News International.

“I don’t know of anybody, or anything, that did anything that wasn’t being done across Fleet Street and wasn’t the culture,” Murdoch said. “And we’re being picked on . . . It was a get-even time for things that were done with The Sun over the past 40 years, 38 years, whatever it is.”

A journalist picked up on this: “You referred to, you used the phrase, ‘Things were done on The Sun for over 40 years’.

“I personally have been here for less than 10. But I’m pretty confident that the working practices that I’ve seen here were ones that I’ve inherited, rather than instigated. Would you recognise that all this pre-dates many of our involvement here?”

Murdoch: “We’re talking about payments for news tips from cops: that’s been going on a hundred years, absolutely.

“You didn’t instigate it.”

Cash for powerful friends

Murdoch went on to describe his direct experience of seeing a wall safe in the office of the chief executive of News of the World after he bought the paper in 1967: “And I said, ‘What’s that?”

Saturday night was when the front page was laid out, the front page splash is nailed down and the paper went to press.

Another journalist told Murdoch the first time he had heard about the 1906 law against bribing an official was when he was arrested.

“The first time I heard about it was a ­couple of weeks ago,” Murdoch interjects.

The journalist continues: “So, completely oblivious to the fact that the long-term practice of this company to pay public officials was illegal, my job description meant that as a result of that, it came directly through my particular department . . . You can understand how we all feel that we are effectively being made scapegoats.”

Murdoch: “Yeah. And one of these high-priced lawyers would say it’s our fault, but that situation existed at every newspaper in Fleet Street. Long since forgotten. But ­absolutely.”

ExaroNews editor-in-chief Mark Watts says police seeking the tape excerpts told him they saw it all as “potential evidence of what they referred to as conspiring to ­commit misconduct in public office”.

Murdoch’s remarks show a company accustomed to paying bribes to officials over a long period of time as part of its culture, something of which he had personal experience, but which he dismissed as immaterial, or did not even know was illegal.

This is exactly the situation that the US Foreign Corrupt Practices Act targets, where the problem is not the employee but the company they work for.

News Corp’s insurers have already paid $US125 million to settle a shareholder action against directors over the UK hacking ­scandal. For two months, US media circles have been buzzing over reports that News will ­settle the FCPA investigation for between $US750 million and $US1 billion.

The Murdoch tape has changed the game again. If News Corp makes a big FCPA settlement (and it will be 21st Century Fox that actually provides the money), it will be judged against Murdoch’s comments.

That, more than anything, puts pressure on his continued role as executive chairman of 21st Century Fox.

But for regulators, here’s the rub. While the full transcript was released, the tape excerpts have only Murdoch speaking. The questions that provide the critical context have been removed.

For News Corp, that’s a get out of jail clause, figuratively speaking. Will the full tape emerge? This, then, is the next play.

For the ­mystery party who made the tape, made the transcript, edited the tape, ­then released the excerpts to Private Eye and then to Exaro­News and Channel 4, the ­mystery party who has been pulling the strings, the question is: How far are they ­prepared to go?